Qualifying for an annuity

To qualify for a monthly retirement annuity from TRS, you must meet one of the following service and age requirements:

* May use the Early Retirement Option to avoid a discounted annuity.

Determining an annuity

This publication assumes you have or will upgrade to the 2.2. formula. If you have not upgraded to the 2.2 formula, please call a TRS benefits counselor at (800) 877-7896.

A retirement annuity is determined by two factors: average salary and total years of creditable service, including fractional years.

Average salary

Average salary is the average of your four highest consecutive annual salaries within the last 10 years of creditable service. Each annual salary rate cannot exceed the previous year’s full-time rate by more than 20 percent. Any earnings above this limit are excluded. The 20 percent cap on salary increases applies only to service with the same employer.

Years of creditable service

Years of creditable service determine the percentage of the annual salary for which you will receive credit. This percentage is your “years of service factor.”

You are entitled to 2.2 percent for all pre-July 1, 1998, years of service that you have upgraded and all years of service after July 1, 1998.

Maximum retirement annuity

You can achieve the maximum retirement annuity, which is 75 percent of your average salary, by meeting the following requirements:

• 34 years of service under the 2.2 formula if you are age 60 or older
• 34 years of service under the 2.2 formula with the Early Retirement Option (ERO) if you are between ages 55 and 60. Up to two years service for unused and unpaid sick leave days can be used to reach 34 years.

Figuring your years of service factor

You have upgraded your pre-July 1998 service to the 2.2 formula:

Estimating your retirement annuity

Assuming you are age 60 (or age 55 with 35 years of service credit), write your highest four consecutive salary rates within the last 10 years of service on Line 1. Then complete Lines 2 through 5 to estimate your monthly retirement annuity.

* Each annual salary rate cannot exceed the previous year’s full-time rate by more than 20 percent. Any earnings above this limit are excluded. The 20 percent cap on salary increases applies only to service with the same employer.

Discount Factor

If you are between ages 55 and 60 with fewer than 35 years of service credit, your monthly annuity will be reduced. Complete the formula below to figure your reduced monthly annuity.

Early Retirement Option

If you are a TRS member between the ages of 55 and 60 and have at least 20 but less than 35 years of service, you may use the ERO to avoid a discounted annuity. If you do not use the ERO and you retire with less than 35 years of service, your annuity is reduced 6 percent for each year that you are under age 60.

ERO eligibility

All of the following conditions must be met to use ERO.

• You must apply with TRS and retire within six months of your last day of contributing service.
• If you are under age 55 when you cease teaching, you may use the Early Retirement Option if you turn age 55 and if your retirement begins within six months of your last day of service.
• You and your last employer must each make a one-time, nonrefundable ERO contribution to TRS. The contribution is a percentage of the highest salary rate used to calculate your average salary.
• The ERO contribution is in addition to contributions required to upgrade pre-July 1998 service credit or to pay for any optional service.
• Substitute teachers must teach 85 or more days in the last school term with one employer to be eligible for ERO. The final day of teaching with that employer must be within six months of the date of the application for retirement.

ERO costs

You and your last employer must each make a one-time, nonrefundable ERO contribution to TRS. The contribution is a percentage of the highest salary rate used to calculate your average salary. Your employer’s percentage is calculated by multiplying 23.5 percent for each year or partial year that your age is less than 60. Your percentage is calculated by multiplying 11.5 percent times the lesser of:

• The number of years or partial years of service under 35 years; or
• The number of years or partial years your age is under 60.

Example of ERO Costs

Contributions are required in all cases.

ERO expiration

The current ERO does not have an expiration date. However, the law requires the TRS actuaries to consider the sufficiency of the employer and member contributions for ERO. There is a specific process that will begin in 2012 for these reviews. If the proposed rates are not acceptable to the General Assembly, the ERO provision will be terminated.

Questions?

If you have questions, please contact us.

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